Latin America

There are a few realities that have hit the world this past year and this past month, to which most of the world has been affected by to some degree. Luckily enough, the issues which affect most Americans have made the greatest impact in the last few weeks of the election campaign, and the decisions people will make when casting their vote will be based on how they wish to change the past, and how they wish to see themselves in the future. Both candidates have accomplished something remarkable. The last two election campaigns offered many a lack of choice in a candidate who they felt would really push the country in a proper direction. Eight years of George Bush, Iraq and Afghanistan, the Economic Meltdown, 9/11 and Hurricane Katrina, have left only candidates who can do the job available to be elected. Both Obama and McCain are good people, and either one is capable of placing their efforts into repairing a slightly damaged, well used and still well running America with a lot of work. Americans can do little wrong in choosing either candidate, but with the election close by and Obama likely to win, the following is a letter to Mr. Obama, and with some luck, Mr. McCain from the rest of the world who does not have a vote, but will be affected by their decisions as much as any American.

To start, the neighbours of the United States should be acknowledged for their constant support and connection to the United States. Canada and Mexico, despite issues of trade and immigration have done much in the last few years to accommodate not just Mr. Bush, but Americans as a whole. Currently Canada is one of the only developed nations who did not face complete economic collapse and places over 90% of their trade with the US. It should be acknowledged that trade and manufacturing in Canada has been hit as hard as in the US, and while NAFTA is blamed on Canada and Mexico, Canada is losing the same jobs, the same companies and the same households to tough foreign competition as much as the US. Canada is one of the world’s largest oil producers and has always worked to move US energy out of the Middle East and grow stronger ties with Canada’s energy and Canada’s economy. Jobs being lost in the US, means jobs are lost in Canada as well. When the loss of jobs is blamed on NAFTA, it focuses energy and time on those who were never to blame for the economic problems in the US. To fight Canada and Mexico is to create scapegoats and lose four more years in improving the economy for all of North America.

With soldiers dying in Iraq, and allied soldiers giving their lives in support of freedom and lives in their own countries as well as the US, Afghanistan and Iraq need to be taken as a whole and the support should be given by the US to help fix problems abroad. According to Southern Pulse in their Oct 28th newsletter, over 4,000 people have died in Mexico’s drug war, with 1,000 being killed in the last 50 days. Canadian, French, British and other allied troops have been taking heavy casualties in Afghanistan, making the region into a stalemate over the last 6 years. The worst problems have yet to be approached, with Darfur and Africa having yet to receive tangible attention towards genocides in the region which mirrors Rwanda in magnitude and action from the international community. Security in the United States cannot be achieved when those who support the US are under constant pressure and attack. Mexico has had as many deaths in the last year in battling the drug lords as soldiers have died in Iraq since 2003. A serious attempt in Afghanistan and a creative approach to Iraq must be achieved soon so other regions do not fall into chaos.

Immigration, while being solidified as a failed policy must start to acknowledge the existence of many from Latin America and Asia as players in the social framework, even if the legality of many residents are non-existent, they still are a part of every community in the United States. While illegal immigration needs a cathartic debate in America, those who have suffered from action, namely 2 million Iraqi refugees need to be addressed as well and accepted as people who are running from an Iraq which the US has not been able to claim victory and peace over. No greater respect to US soldiers and Iraqi citizens would come from a realistic approach that helps Americans, soldiers and their families, but also those so many fought hard to save; the Iraqis themselves. The use of the word “Change” and “Pull Out” will not stop violence and death in Iraq, only proper leadership will help end the conflict.

With a world depending on the US economy to operate, those nations in Latin America and Europe need a strong United States that will work and support their nations as those nations wish to work and support the US itself. While there is much criticism coming out of socialist governments in Latin America, the majority of nations who have spent the last few years in cooperation with the US and achieving great stability and peace within their own borders should be supported by the US and credit given to their development. Bad policy has created a situation where Chavez can attack Bush, as failure in leadership creates a large scapegoat, but good leadership with focus the attention on those local leaders like Chavez and allow for those democracies to eject problems in their societies. While not to the same degree, America’s European partners have actually moved to re-engage with the US in a discussion to not only repair the current economic troubles, but also to re-invigorate the relationship of values and equality that should have always existed between Europe and the US. Elected leaders in the EU, Canada and Mexico have moved towards policies which have been considered traditionally American, and America will move towards a position where it adopts some trends from its partners, as well as hopefully cultivating respect with Europe and Latin America in the process. The future of the US will come with the future of Europe and the Americas. Leadership will only allow for a successful relationship in the future.

Emerging economies must be addressed to end this letter. China, India and Russia, as well as other nations have achieved a great deal of development, and with recent funds have been able to address national problems of poverty and development, many thought were impossible to tackle only 5 years ago. These countries have a right to compete and gain wealth, but if companies from the US and EU seek to find fortune in those countries and work with local companies which may produce harmful products or take away American jobs, than those American and European companies should be challenged and blame should not be placed on Canada or Mexico, who have lost much as well, and irrational barriers should not be placed on developing economies because companies from the US and EU take advantage of their consumers. To create scapegoats in this debate, is to create a situation where no one can foresee economic troubles, and regulation is left to create blameless policymakers in its wake. The crisis of the last 20 years was always not one of tangible losses, but in confidence, that companies and the government might and have lied to you, and that anarchy is unavoidable when problems ignite. Trade, finance and economics needs to work in society, as a parallel to democracy, in order to allow a leader to create any “Change” that is needed. The world needs a US presence, one with clear foresight and the ability to stop alienating its friends and address real threats to everyone’s security. Only an understanding of the world who cannot vote will allow for any positive change to take place. A failure is no longer an option for America and their friends.

In the last two weeks while markets tumbled, the amount of information about common issues such as poverty, the food crisis and even the economies of otherwise notable countries have also dwindled as American candidates preach of change and the rest of the world deals with economic aftershock. While Europe and the US slowly absorb their financial industries into the public purse, other middle countries and emerging economies deal with the problems and try to seek out the positive aspects of the world’s financial capitals plunging into chaos.

Not all countries, even developed ones, are in the same position as their European and American counterparts. In an IMF report published in the second week of October, countries such as Sweden, Australia and Canada were credited with having very stable banking systems with well regulated capitalization requirements and having sturdy foundations to best weather the latest economic storm. Canada stood out as one of the best, influencing their own election for Prime Minister and allowing the fiscally prudent Conservative Party to absorb many opposition party seats despite having a campaign during the financial crisis that is often blamed on incumbent government policy. Since the start of the Canadian election, the Canadian Dollar plunged from 97 cents US to 79 cents US as commodity stocks lost value. With over 87% of Canada’s trade going to the commodity hungry US, Canada has taken steps to keep the liquidity in their financial system and even had talks with President Sarkozy of France before his left the meetings of the Francophone to begin talks for a free trade agreement between the EU and Canada. Despite economic turndown and the drop in Canada’s currency against the US, trade will likely finally open up to the EU and Latin America in order to keep relatively cash rich Canadian companies in the mindset of investing their “non-losses” into economies overseas. Activities between the EU and the US played out in the same narrative last week as Sarkozy’s mission to save capitalism and create a new global economic order, a Bretton Woods II, lead him into talks with Bush in the US to coordinate a common response to the failing markets. Sarko’s proactive approach even reached into France’s cultural policy, by planning trade talks with Canada while trying to bring ties between Canada’s English speaking and French speaking communities closer and maintain stability in the only G8 country which has not plunged into chaos. Stability in some form in the developed world is what the EU and US need, even if not inside those economies themselves. It is likely that while traditional blue chip investments will not maintain their blue chips forever, it is possible that places like Canada and emerging economies may take some benefits with the losses in the global economy.

With so little information about emerging economies coming out of mainstream media in the last two weeks, some interesting dynamics have been playing out in the process. While not a complete paradigm shift, some investment chatter has been moving towards placing money in China and India due to the recent cash rich position of those economies despite recent losses there as well. While today there was a talk of a financial rescue package between China, Japan and South Korean with its ASEAN partners, relatively China is not the worst off in Asia. While the Chinese and Indian economies are highly dependent on the purchase of consumer goods in the US and EU, cash which has been acquired in their recent economic booms will enable cash rich companies in those emerging markets to purchase shares in many failing companies in the EU and US and might place Chinese and Indian companies in a position to not just be on the production end of product development, but also purchase the ability to vertically integrate their industries by way of relatively cash rich Chinese and Indian investors. This new position does not wholly account for the fact that China and Japan own a good size of US debt, and while Tokyo’s Nikkei is feeling the crush of the crisis, the 1/3 of US debt owned by China will only spur emerging markets into a relatively better position despite current losses in China and India as a whole. Even the Middle East is feeling some benefits, as the rise in 2007-2008 oil prices have left many producing countries with money to burn despite recent falling oil prices this month. This will be remedied as well as OPEC will be meeting this week and after to curb the fall in global oil prices and maintain oil at the relatively high level despite the losses in the US and EU and falling demand for their products. In the end, Dubai might replace London and New York to become the place to go for the best and brightest coming out of Oxbridge, Yale and Harvard.

An interesting dynamic has also been created in a region, which has veteran experience in dealing with economic crisis. Latin America has always suffered in the past 30 years since the last oil boom and recession in the 1970s due to poor economic policies, schizophrenic investor confidence and pure bad luck. Only recently have countries like Brazil, Venezuela, Argentina and Mexico been able to weather an economic collapse and pay back their past debts. Initially, the realization that the economic storm has finally come from the US and not from their own economic crisis was not being played down to any degree by Latin American leaders. Initially the strong Brazilian and Venezuelan economies lead leaders in those countries to direct concern about the US collapse away from South American markets. While not commonly known, trade between many countries in South America is often less than 40% with the US. While Canada and Mexico have taken measures to re-capitalise with over 85% of their trade being conducted with the US, South American countries believed their trade position, balanced economies, and well earned savings would allow them to be passed over in the latest crisis. With the collapse of the EU and Asian markets, Latin America followed with a 12 percent drop in the Brazilian exchange Bovespa and the biggest drop in Mexico’s Bolsa since 2000. Despite this, IMF predictions of growth in the region in 2009 made in April of this year only shifted down slightly from 4.4% to private investor predictions of a growth rate of 3.5% for Latin America as a whole. With many investors putting their funds into the US Dollar for safety reasons, the paradigm shift, that other economies might be seen as safe investments beyond New York, Tokyo, London and Paris might buoy investor confidence in emerging economies and relatively cash rich nations in order to diversify their funds further as investment risks grow at home to the benefit of stable markets abroad. While not all emerging economies will benefit, as in those like Mexico and Russia which have been hit hard despite keeping afloat and massive recapitalisations, markets such as Brazil, India and China might be able to increase confidence in their economies in the long run and balance many diversified portfolios if economic management and legal protections can be ensured in the next few years. While the paradigm shift has not yet occurred, it is evident that a change in the global economy that was going to take another generation has perhaps emerged in the last month. With losses come opportunities, and with nervous investors and bad policies at every turn, only intelligence, patience and luck will determine if change will occur and create a new economic order.

CNN made a great acquisition taking on policy expert Fareed Zakaria and giving him his own show, Fareed Zakaria GPS which allows for a diverse perspective and a balanced international approach to a network which is often known for its Washington point of view as opposed to the perspective of global politics and policy.  The international perspective needs to be understood from the point of view of Paris, Singapore, Beijing and others. Originally the host of a PBS show and author of the book The Post-American World, Zakaria will likely become one of the most important authors on foreign policy in the next few years.

In a week of economic turmoil, Zakaria in his show F.Z. GPS decided to interview political experts from Singapore, India and China in order to get their point of view on current economic and political activities involving the US and other countries. While many perspectives were discussed, it was diverse in that countries like Singapore, India and China did not fare poorly during the last eight years of the Bush administration. While criticism did come about regarding Afghanistan and Iraq and perspectives regarding Russia’s current move into Georgia, Bush’s reputation is not wholly being shared by many in the Asia-Pacific, standing out in contrast to the distain for Bush in Europe, the US and even in Canada. The Canadian example is an interesting one. Currently there is a national election underway where in a recent election debate, issues concerning the country came down to 3 of 4 opposition leaders bringing the debate down to its lowest level and simply accusing the current Prime Minister, Steven Harper of being another George Bush. While Bush is not a Canadian leader and is extremely different to any existing Canadian politician, the real policy debate was wasted and the electorate was treated as people who only decide how their communities are formed based on whether George Bush’s name is shouted out enough times on television. While Bush may not be popular in the Western world, the effect of using him for political gains outside the US can be just as harmful in forming illogical policy decisions based on someone who has no real effect or relation to a government outside the US at all. While the responses from many Asia-Pacific experts was logical and measured, often similar debates about the last 8 years in the Western world are foggy at best.

While new economic giants such as China and India had their perspectives shown on F.Z. GPS, it is curious to see what the last eight years have brought to countries in the Americas, and why certain policies such as immigration has been largely ignored in the recent election campaign. The focus of the Bush administration in early 2001 was immigration and the relationship between the US and the rest of the Americas regarding free trade and the FTAA. Mostly in 2008, the issue of immigration has remained a regional one in the US, concentrating around states on the US-Mexico border which take immigration to heart, but has not become a major election issue. Trade, mostly an issue with China for the US has been brought up in many border states along the US-Canada border. Talks of renegotiating NAFTA to bring jobs back to Americans was rampant, despite the issue having a lot to do with the US relationship north and south as opposed to its ties eastwards. While Mexico has ever increasing numbers going to the US illegally and a severe drug war which has taken more lives in 2008 than US lives in Iraq and Afghanistan combined, the debate on immigration was mostly nullified last year when Bush tried to pass one of his final bills opening up an immigration policy that might rationalize the current status quo on the border. After 7 years of the War on Terror, the original policy issues from 2001 were addressed, but with such complex problems and the lack of support for anything Bush ties his name to, the issue of immigration in the US will not change at all for years to come. In reality, as pointed out in the FPA Immigration Blog, some illegal immigrants are even leaving the US due to the current economic crisis and many in the US are starting to see the effect of Bush policies as changing the perception of America into a country which as one CNN reporter said, is no longer a “beacon of freedom and hope”.

The rest of the Americas in the last eight years have done better than many would expect in the Western world despite many issues impacting the US itself. Canada currently stands out as one of the only countries in the G8 that is not suffering economic collapse, due to very prudent financial policies, good leadership by many governments over the last 5 years and a long term economic boom and national surplus. While being attacked in the Clinton campaign over NAFTA, Canada has been able to not be seen as another China to the US on trade and was able through a great deal of legal debates to come up with a deal on softwood lumber and push Chapter 11 decisions on NAFTA towards a more equitable framework where states have regained much of their power over companies in the NAFTA rulings. Canada has separated its support from the US, ie. regarding not supporting with troops in Iraq, but many citizens support Canadians in Afghanistan and trade with the US. Canada has not fared poorly at all, even weathering the current global crisis with merely slow growth, and keeping a lot of funds in the country and allowing cash rich Canadian companies to buy out many American and European assets if they wish. Canada’s oil industry had a lot to do with this, but in the long run 8 years in Canada has not had many ill economic effects.

Brazil is currently lead by prudent left wing leader Lula and has become a beacon for reform and investment in South America. Since financial collapses that characterized the country in the 1990s, Brazil has been able to maintain a balanced level of growth and social reforms that has brought confidence into Brazil and has made it the next likely emerging economy to become another China or India. While political issues still exist to a great degree, oil and slow progress seems to be paying off and Brazil will likely weather this economic storm with a few scratches and bruises, but keep afloat. Chile is in a similar situation. With left leaning leaders and prudent economic policies and progressive social policies, stability may become a mainstay of many countries in the Americas in the future.

Venezuela also has stood out from many of its neighbours. While Brazil has benefited a lot from its oil reserves, Venezuela has had its oil reserves propel it into a forum for Chavez’s influence in the Americas and remains Venezuela’s only notable source of revenue. Venezuela often uses actions by Bush as the motivator of policy decisions, mostly in cases where the US has ignored Venezuela and Latin America in the last 8 years. In reality, the involvement the US has had beyond some trade policy in the last 8 years has been very minimal, only opening up further ties with economically stable countries who stabilized themselves, and not having any heavy response to populist claims by Chavez and others who often use Bush and supposed actions by the US to justify all types of local policy decisions by populist leaders. While the degree of US involvement in Venezuela is not known but likely is minimal, countries like Colombia have been able to use local and US assistance to independently address local issues. The Colombian Army’s rescue of Ingrid Betancourt and American hostages from the FARC was seen as a Colombian initiative and praised by the US as solely Colombian. Ironically the FARC later was accused of having been supported by Chavez himself, mimicking accusations he had against Bush in interfering in local politics. Increasingly criticisms of Chavez come with the diminishing influence of Bush. Without Bush as a scapegoat, it will be hard to place Obama in a negative light and accuse the causation of problems in Venezuela on the President of the US. Recently a critical report on Venezuela lead to the coercive expulsion of human rights leaders from Venezuela…actions which will reflect poorly in Chavez in the future with no Bush to blame for the future.

Many other countries in the Americas have been set with their own local issues and have had some support and acknowledgement from the US in positive and negative manners. Mainly the US in the last 8 years have ignored Latin America due to The War on Terror, and minimal support and ties with the US has not had a negative effect for many in the region and their development. Ignoring the Americas, the backyard of the US and important future allies is not an option, as pointed out by Zakaria in his statements and book. A strong America’s’ will do nothing but help the US reintegrate into the international community if respect and independent policies are supported by the next President of the US and progress of the Americas is valued and not hindered. Reactionist trade policy and calling the opposition George Bush when no coherent discussion is available to win votes in an election is not acceptable on any level. Policy cannot be formed by name calling, and any politician who uses this tactic does nothing but to embarrass themselves and their supporters in a democracy. The Bush era is over, and only working for new opportunities is an acceptable conclusion.

In 2001 the head of the Inter-American Development Bank spent much of his time fighting speculation that one of Latin America’s giants, Argentina, had enough national reserves to maintain a 1:1 ratio between the Peso and the US Dollar and maintain confidence for investors that they would have their investments returned with acceptable risk. Five Presidents later and six years later, Argentina is fighting to stave off another economic crisis with some added funds in the bank, promises to pay back much of its international debt, and many of its creditors suffering from an economic collapse which might ironically place Argentina in the position to gain added investments if its reputation can handle the latest wave of financial crisis to hit the globe. It is doubtful this will happen of course, but with poor economic and political leadership in the US, the world and its source of international funds have taken a process that was expected to take 40 years and reduce the US into a shared global power into a change in the world economy which is today’s reality.

Questions which always have arisen are whether regulations or political leadership had the ability to avert crisis that come from decisions made in private industry and in private boardrooms. One argument regarding Argentina is that loans given to The Argentine and other countries by international creditors place complete onus on the borrower to assume ALL risk in the transaction. As with small business loans in many financial markets, the tradition of incorporation and all of its legal rights for an investor to be separate from the company with separate legal identities is signed away, leaving all risk in the transaction on the head of the borrower. The problem with this on a micro level reflects that of the macro level, leaving all risk on the borrower, but not placing any onus on the lender to make a business decision on their clients in order to avert losses to the company. Like with international lending, risk is always taken by the borrower, so when there is a problem in the relationship, bad business decisions by the lenders result in a situation where gains are taken as profit, but if there are losses the borrowers must go well beyond reasonable measures to pay back a loan that might have been given without consideration to risk, as lending in the modern era has been able to avoid the Invisible Hand of the market as poor economic decisions have little effect on irresponsible lenders who see no ill effects from giving bad loans to people and countries who have no rights to shield themselves from the market.

While Argentina has announced this month that it will make moves to pay back its international creditors (Risk insurance for Argentina is very high or not offered), what is the effect if a whole industry makes poor business decisions and the borrowers simply return their capital and leave the lenders with large numbers of very nice houses? The root of the mortgage crisis is the obvious result, but it must be challenged on three levels. We must return to the ideas of Adam Smith and the root of modern capitalism. Fundamentals such as the Invisible Hand of the market is the basis of the US economy, but in an industry where risk can be passed off to the consumer, sold into the larger market or as we see in the Bail Out, allow for private companies to claim profits but make US taxpayers and government cover their losses, private gains are created and losses are made public. The free market cannot sustain itself as lenders do not take any substantial risk and thus make business decisions which would lead any other company in any other industry into swift bankruptcy, but in the financial industry allows mortgage lenders to make irresponsible business decisions without the consequences of market forces to bear on those decisions.

Regulation and government intervention must be considered, as with such a unique industry which relies heavily on non-risk and government regulation and bail outs, the market forces on the financial industry must invite regulation in order to maintain its non-risk positions and insure losses by way of the national reserves despite poor decision making by those in the industry themselves. The root of financial industry theory is that the market will determine the right course of action for people, but that regulation is needed to insure that losses will not create a catastrophe in the process. In Argentina, the failure of the economy forced banks to literally lock people out of their private savings so that a run on the currency would not create a collapse. Luckily the US does have reserves to cover the losses, but did the crisis comes from regulation impeding the free market, or does the free market simply not work? I would argue that since risk and consequence is the result of any business transaction, an industry which prohibits other industries from growing without giving sensible risk to the lender cannot vent its problems on regulation and a government that is insuring any and all mistakes made as a result of poor decisions collapsing their industry as a whole. Regulation is a key issue as it allowed mortgage lenders to sell their risk into wider financial markets and is the reason why the current catastrophe has echoed worldwide, but the same regulation also is there to keep the US out of the chaos of Argentina, namely, to maintain confidence in the US economy that risk of losses is low and that the market is strong. So is regulation a barrier to the free market and caused the current problems, to some degree it did allow for problems to arise, but mostly due to an industry making decisions without consequence and giving the risk to the public in many forms with no constructive losses to financial companies or threats of real losses to their own private companies.

Leadership, while likely the most media friendly issue and less complicated than the equations needed to understand the Bail Out, has done little to address the true need for proper regulations, the true market effects of the financial industry and creating laws which protect consumers. They have done little to protect the national reserve and provide that economic decision making should bear consequence on those decision makers in private industry and remove the corporate veil for larger financial companies as is the case with many business borrowers and consumers of the financial industry which need those companies to help grow their local economies and communities. As debated by Mr. Obama in last night’s debate, the financial crisis we have to date is the final legacy of the Bush Administration, but while a Bail Out may make this issue last week’s news, the massive amount of borrowing from lenders in cash rich China, Dubai and other wealthy emerging economies in the last eight years and the economic alienation of US allies in the process in places like Europe, Canada and Latin America may take a process of normalization of investment trends from the US to the world into a situation where those new lender countries will be on par with the US immediately. It was thought by writers like Zakaria and Khanna that over a course of 15-35 years, the US will become one of many economic superpowers in the globe, but due to poor leadership and a financial industry which has chosen to give the death kneel to the American Empire of the 20th Century, measured predictions by those authors will likely come true before the paperbacks of their recently published books become available. The next President, whoever he is, will likely be a better choice than anyone in the last 20 years, and will spend the better half of the next four years cleaning up America as he bears the responsibility for cleaning up everyone else’s mess. Like the formidable Cristina Kirchner of Argentina, charm can only go so far when you are the caretaker of a crisis from the past. Suffering politically from chaos which she cannot end and did not create, Obama or McCain will inherit one of the worst jobs you can have in the financial industry, the country’s official risk bearer.

The definition of countries in poverty has needed to open up to a wider lexicon of terms in order to explain the various ways in which a country could be in poverty, and the stages in which it might be able to get out of it. In financial circles, the term BRIC, referring to Brazil, Russia, India and China have created their own investment category, known in common speak as “Emerging Economies”, places like Mexico, Turkey, Indonesia and Thailand have joined the BRICs as potential gold mines for investors, win or lose, it has been an exciting ride.

Since the 1990s, emerging economies have been seen as the instigators of global economic collapse as well as the drivers of future untold fortunes. Economic collapse often followed early regulatory changes in many of these countries. Reading like a villain in the latest Batman movie, The Asian Tigers, a collection of smaller Asian economies was hit by financial crisis in the late 1990s. Russia, Turkey, Brazil also collapsed since then on more than one occasion. Mexico was one of the first to collapse in 1993, complemented by Argentina as one of the last, which had a number of severe collapses, leading to a major one in 2001. All these economies seem to be doing relatively well now, especially larger ones like China and India, who this week were strong enough and had enough clout to stop the Doha Round of the WTO, based to a great degree on India’s disapproval of the agricultural limitations in the agreement, a source of income in which emerging economies often have as one of their staples of national revenue.

With India now being able to determine the course of future international trade treaties and China being seen by many as the next economic power and rightful host of the Olympics, what will countries like Russia and Brazil do to place themselves in such a position in the future? Russia, earning massive revenue from its oil reserves has spent the last twenty years trying to reassert itself amongst oligarchs and conflicts, economically and militarily. While Russia has had many opportunities in reality, cities like Moscow and St.Petersburg have taken much of the benefits and have left rural Russia in neglect. Much of the country’s wealth is only now being re-absorbed and stability in government reasserted while rights of protest have been curbed to a great degree. Recently, military exercises in the North Atlantic and with China have put NATO on alert, showing that which Russia might not become the next economic giant, it certainly wishes to be heard in some manner.

While large yearly GDP revenue is considered an economic miracle in most of the world, 9-15% GDP growth was often common in Latin America throughout the 90s, and resulted in spectacular economic collapse in Brazil, Argentina and throughout the region many times over through 2001. Brazil, with its former labour leader and President has not taken the populist approach to economics, adopting policies of centrists past Presidents to form a step-by-step approach to growth for the world’s next big emerging economy. With a slow and stable growth rate of 5%-6%, Brazil is moving slowly out of economic instability to become the next stable global economic power. While Brazil has a population of over 170 million people, the Brazilian economy is about the same size as Canada, which has a population of 32 million. Brazil, with its stable progressive growth rate and poverty reduction strategies spends much of its time acquiring an economic future while trying to reduce its poverty rate and reduce inequality in the process. Avoiding heavy IMF measures to slash inflation, and avoiding Chavez like populism in reducing poverty in exchange for its business class, Brazil may stand out as the model for Emerging Market development if high GDP rates in India and China cannot manage its plus 10%-15% GDP and the changes and attention it brings in the long run. While time will tell which development strategies are successful in the long run, it is evident that the BRICs of the world are all different and all successful in their own unique achievements.