Blame it on the Bossa Nova: Brazil dances to inefficiency.

A recent study by the Boston Consulting Group rated Brazil as a more expensive manufacturing venue than Europe due to low productivity.  A report in the FT today, however, indicates that what Brazil lacks in efficiency it may be making up in volume.  Government revenues have risen from 33% of GDP in 1999 to 39% today, compared with an OECD average of 36%, while the country ranks 124 out of 148 in government efficiency, according to the World Economic Forum.  Under Lula and Rousseff, the number of ministers has about doubled to 39 and there are other cabinet-level officials, each with his retinue of advisors, consultants, minions, sycophants and hangers-on.  The FT relates the story of the rookie bureaucrat in Brasilia who was warned by her supervisor that she should stop spending eight hours a day at the office and put in four like everybody else. (FT, p2)

Sweden massages its data and is shocked by high household debt

Oops!   Sweden's central bank has adjusted its figures.   They had been concerned that the ratio of household debt to disposable income was 174%, one of the highest levels in Europe.  (In the US it’s more like 120%.)  Delving deeper, they noticed that when one excludes the households with no debt at all, the ratio is 313% of disposable income.  They are shocked.  (Reuters 5/7) 

It seems that the countries that avoided the financial crisis are destined to have one.  Debt and housing prices are soaring in Australia, Canada, Sweden, Holland, and other countries.  Global easy money is undermining the heretofore healthy economies.

Below-average central bankers: The Yellen Years

Janet Yellen testified today before the Joint Economic Committee of Congress.  Sen. Bernie Sanders of the Vermont Progressive Party asked her if the US were an “oligarchy or a capitalist democracy.” Yellen said she doesn't know how to describe our system but she, like Bernie, is troubled by the fact that everybody doesn't have the same amount of money.  (CNBC)

If she doesn't know what our economic system is, wouldn’t she find it difficult to lead monetary policy?

Keep and eye on Tony Blair: His kind are money launderers, say the Feds

JP Morgan is closing the accounts of 3,500 "politically-exposed persons" because new US regulations aimed at squelching money laundering are imposing too many costs and liabilities.  Included among those whose accounts are being terminated are Jose Antonio Campos, former Colombian finance minister and candidate for president of the World Bank, and Tony Blair, a British politico on JP Morgan’s payroll.  (FT, p13)

It appears that the federal bureaucracy thinks all foreigners are bad.

The Zen of the Oligarch: think money

The new Ukrainian governor of Odessa, an oligarch, has adopted a creative way to stifle dissent.  He is planning to offer bounties of $1,000 to $100,000 for the capture of political protesters, following the example of a fellow oligarch governor further east. Oligarchs are limited in their communications ability: they can only speak the language of money. The local police, too, apparently. (FT, p2)

The Bank of England has introduced new rules requiring banks to spend two hours interviewing each mortgage applicant, which is an ingenious way to slow down borrowing.  

Canadian housing prices approach the ozone layer

A survey of 56 countries by Frank Knight shows that world house prices rose more than 8 percent last year. Prices in eleven countries rose by double digits. (FT 5/6. P2)  Shortly after I read this, someone sent me a chart comparing US and Canadian housing prices.  After a slight tremor when the US cracked, Canadian house prices soon resumed their upward trend.  The high price of housing in Canada has long puzzled me.  It is, after all, the second largest country in the world by area and sparsely populated. 

 

For example, Yonge Street in Toronto, which extends north from Lake Erie toward the pole, was listed in the Guinness Book of World Records as the longest street in the world until it was displaced by the Pan American Highway, which runs from Alaska to Chile, in 1999.  Yonge Street is 1,178 miles in length.  It was built in the 1790’s and named after Sir George Yonge, the British Secretary of War at the time and, was designed so that the capital could be evacuated northward in the event of a US invasion. 

(Given the length of the road, the British were clearly contemplating a worst case scenario. -- The route’s straightness belies the legend that it was built by prisoners arrested for inebriation.)  One would think it possible to have a prestigious Yonge Street address fairly cheaply somewhere.  But prices are twice the US level.