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from Photographers Blog:

Village of joy

By Ueslei Marcelino

Deep in the Brazilian heartland, where the upper reaches of the Amazon Basin dissolve into the central plateau,  I had the opportunity last week to spend a few days in the village of joy.

What I dubbed the village of joy is the home of the Yawalapiti tribe. One day last week, a group of us were escorted into the Xingu National Park by members of the Darcy Ribeiro Foundation and the Cavaleiro de Jorge cultural center, and arrived at the circular Yawalapiti village under an enormous full moon.

The mood was one of celebration. The Yawalapiti, one of the 14 tribes living inside the Xingu National Park, were preparing a new "quarup," a ritual held over several days to honor in death a person of great importance to them. In its original form, the quarup was a funeral ritual intended to bring the dead back to life. Today, it is a celebration of life, death and rebirth. From the very oldest to the very youngest, all the members of the Yawalapiti tribe participate in the preparations.

They wrestled, danced, fished and prepared food for the main event which will happen in August. Yawalapiti warriors held wrestling matches in a sort of qualifying round to select the best team to confront warriors from other tribes. From the inter-tribal event during the quarup will emerge the great champion.

from Global Investing:

Poland, the lonely inflation targeter

Is the National Bank of Poland (NBP) the last inflation-targeting central bank still standing?

The bank shocked many today with a quarter point rate rise, naming stubbornly high inflation as the reason, and signalling that more tightening is on its way. The NBP has sounded hawkish in recent weeks but few had actually expected it to carry through its threat to raise rates. Economic indicators of late have been far from cheerful -- just hours after the rate rise, data showed Polish car production slumped 30 percent in April from year-ago levels. PMI numbers last week pointed to further deterioration ahead for manufacturing. And sitting as it does on the euro zone's doorstep, Poland will be far more vulnerable than Brazil or Russia to any new setback in Greece. Its action therefore deserves praise, says Benoit Anne, head of emerging markets strategy at Societe Generale.

(Poland's central bank) is one of the last orthodox inflation-targeting central banks in the global emerging market central bank universe. They are taking action because they are seeing inflation creeping up and have decided to be proactive.

The rate rise  is especially notable given many central banks in developing countries appear effectively to have surrendered their inflation-fighting mandate. Nowhere is the push for lower interest rates more pronounced than in Brazil where the government last week announced plans to scrap fixed-rate savings deposits in a move that is seen paving the way for more agressive rate cuts. Clearly there is tolerance here for higher inflation, which will still end 2012 well above target.

But many analysts such as Manik Narain at UBS consider Poland's decision a high-risk one given the growth issues. Narain sees it possibly motivated by the need to signal Poland will not welcome further currency weakness (the zloty like most emerging currencies has shed much of its early-2012 gain) Therefore a prolonged monetary tightening cycle is unlikely, he says. Indeed many reckon the NBP may find itself, like the European Central Bank last year, reversing an ill-considered rate rise. Analysts at Capital Economics write:

If we are right in expecting growth and inflation to slow by more than most expect over the second half of this year then this may well be the NBP’s “ECB moment”. Recall that having hiked rates twice in the first half of 2011, the ECB was forced to start loosening policy once again by November as the economy weakened. In Poland’s case, we think there is a good chance that today’s rate hike will be reversed by the end of the year.

from Photographers Blog:

The truest of smiles

By Nacho Doce

What brought me to the AACD (Association for the Aid of Disabled Children) clinic for the first time was Dani, a 16-year-old girl who had been diagnosed with severe scoliosis, or curvature of the spine. When Dani’s mother, a close friend, showed me her x-ray it was a shock. All the doctors they consulted repeated the same diagnosis and solution - surgery. We didn’t doubt that surgery was one solution, but her mother wanted to find a less radical one that wouldn’t leave her daughter with a metal rod in her spine limiting her movement. Dani exercises every day at home with a therapist to change her posture, and began visiting AACD. Admittedly ignorant of the range of problems that cause so many children to become disabled, I was astonished by what I saw – children with severe conditions fighting physically and mentally to improve their lives.

It was the children’s smiles and willpower that drew me to them from the start, as much to those who couldn’t move as to those who couldn’t speak or sense. The parents and even the therapists also showed incredible strength. Once I asked Yara Santos, 9, “How are you able to smile all the time?” Yara tried to answer me, but due to her condition I couldn’t understand. Her mother and therapist could, and they answered for her. “There’s no recipe for smiling,” were Yara’s words.

Another girl who impressed me with her willpower was Luara Crystal, 5, as she lifted weights to strengthen her body against the genetic disorder known as brittle bone disease. Her middle name seemed curious to me, so when I asked the therapist about that she said that when Luara was born and diagnosed with the condition her mother chose Crystal for her fragile bones.

from Global Investing:

Where will the FDI flow?

For years the four mighty BRIC nations have grabbed increasing shares of world investment flows. But the coming years may not be so kind.  These countries bring up the bottom of the Economic Freedom Index (EFI) for 2012. Compiled by Washington D.C.-based think-tank The Heritage Foundation the EFI measures 10 freedoms --  from property rights to entrepreneurship -- and according to a note out today from RBS economists, there is a strong positive link between a country's EFI score and the amount of FDI (foreign direct investment) it can secure. So the more "free" a country, the more FDI inflows it can expect to receive -- that's what an RBS analysis of 2002-2008 investment flows shows.

So back to the BRICs. Or BRICS if you add in South Africa (part of the political grouping though not yet included in the BRIC investment concept used by fund managers). The following graphic shows Russia languishing at the bottom of the EFI, China just above Russia and India third from bottom.  Brazil is sixth from bottom while South Africa ranks two places higher.

At the other end of the spectrum is tiny Singapore. Its EFI score is double that of Russia and between 2002-2008 it attracted FDI equivalent to 50 percent of its economy. Russia in contrast saw negative net FDI (outflows exceeded inflows)

What comes next will be interesting. China grabbed the most FDI in absolute terms in the past decade (around $1.3 trillion or almost half the $2.1 trillion flows to the 21 leading EMs) but RBS notes this is slowing. That's because China's low-value manufacturing base is becoming less competitive relative to the rest of Asia and stringent restrictions remain in place in many sectors. Corruption, red tape and general business-unfriendliness prevail. "The decreasing allure of China from a manufacturing perspective means the country is at risk of suffering a decrease in FDI inflows in coming years," RBS writes. The bank also notes the nature of FDI into China is changing: half the 2011 flows went to real estate.

On the other BRICS:

from Global Investing:

Three snapshots for Thursday

Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 386,000, the Labor Department said. The prior week's figure was revised up to 388,000 from the previously reported 380,000.

The four-week moving average for new claims, considered a better measure of labor market trends, rose 5,500 to 374,750.

Brazil's central bank raised its key interest rate for a fourth straight time on Wednesday as it seeks to rein in persistent inflation, and indicated more rate increases could be on the way soon. This follows a 50bps rate cut from India earlier in the week.

from Photographers Blog:

Everywhere a Crackland

By Paulo Whitaker

Crack consumption is an epidemic in Brazil. In virtually every corner of the country there are users of the drug, so we decided to produce a photo essay to cover a wide geographic area. Seven photographers in seven cities during 24 hours. The story titled "24-7, Crack in Brazil" is about crack use in public view in 2014 World Cup host cities Sao Paulo, Rio de Janeiro, Porto Alegre, Belo Horizonte, Manaus, Salvador da Bahia and Curitiba.

In most of the cities our research showed that users logically confine their consumption to areas with little police presence, such as alleys and deserted streets. In contrast, crack use is so widespread in Sao Paulo that users and dealers gather in the city center with no fear of the police.

Our first concern was safety. Addicts do not normally pose a danger but others involved, such as traffickers and police, will react if they sense our presence. I spent nearly a month in Sao Paulo revisiting the streets of a district known for a long time as "Cracolandia", or "Crackland," where I did a multimedia story in 2010. Early this year police routed the addicts and dealers from the two abandoned houses near the bus station where they used to hang out, but since then they have regrouped to other locations.

The city now has several mini Cracklands instead of just one. The difference now is that the police frequently patrol the largest of the new Cracklands, which is only six blocks from the original one. I managed to locate a resident of the neighborhood who agreed to allow me to use his apartment window to photograph from. The day I returned with my camera to take some test photos the police had decided to base a permanent patrol there, and the street was empty. I easily found the addicts' new location just two blocks away, but I was faced with the task of finding a new place from where to work in safety.

from Full Focus:

Crack 24/7

Reuters photographers spent 24 hours in seven Brazilian cities chronicling their "cracklands," the areas of the city where swarms of crack users have converted entire neighborhoods into nocturnal encampments doubling as open-air crack markets. At nightfall, legitimate commerce gives way to the gritty transactions of the crack trade, throngs of stupefied buyers crowd around dealers before skulking away behind the telltale glow of cigarette lighters. Read the photographer's accounts here. WARNING: GRAPHIC CONTENT

from The Great Debate:

America’s path to alternative energy runs through Brazil

Mitt Romney alone can no longer be saddled with the label of most obvious flip-flopper among this year’s presidential candidates. That honor instead belongs to Barack Obama, whose 180 on the Keystone XL pipeline construction last week was sufficient to induce whiplash among oil industry executives and green advocates alike.

In an effort to actually make good on his “all of the above” energy policy, promoting both fossil fuel and renewable energy, President Obama had no choice but to pull off a neck-twisting reversal. Five months ago he postponed a decision on whether to build a controversial $7 billion pipeline to bring Canadian oil sands fuel down to Texas refineries. But it turns out that was only a temporary sop to the activists who see the structure as both an environmental threat as well as the embodiment of reckless Big Oil greed.

Now, with his opponents falsely equating current high oil prices with Obama’s perceived inaction on domestic energy development, Obama is acting differently. He’s scrambling to counter them by not only reconsidering the earlier postponement but actually accelerating the pipeline’s build as a national priority.

As recently as Mar. 8, Senate Democrats echoed Obama’s early wariness on the pipeline by defeating a Republican bill to fast-track Keystone’s construction. The bill fell short by four votes, no doubt due to Obama’s personal outreach to several senators for their “no” vote, prompting Senate Minority Leader Mitch McConnell to remark: “At a moment when millions are out of work, gas prices are sky-rocketing and the Middle East is in turmoil, we've got a president who's up making phone calls trying to block a pipeline here at home. It's unbelievable." After two weeks of damaging poll results, Obama hurried to a photo-op in Cushing, Oklahoma to announce his embrace of the pipeline project.

It would be easy to dismiss such quick U-turns as election year politics-as-usual, but perhaps the truth is that Obama and his advisers finally saw the light on the game-changing potential of North America’s energy opportunities. Within the oil and gas sector, the talk of America becoming energy independent has reached fever pitch since Obama nixed his earlier decision on Keystone. Last week’s Wall Street Journal op-ed by renowned Citigroup energy analyst Ed Morse, “Move Over OPEC – Here We Come,” painted a dramatic picture of a Western hemisphere hydrocarbon revolution based on the current glut of Canadian oil sands crude, American shale gas and Mexican offshore drilling, rendering the Americas as “the new Middle East."

Statements like that reassure defense observers who see the dangers of foreign oil dependency and encourage multinational fuel corporations. But it’s also the renewable energy companies that stand to benefit. Solar, hydropower, wind and green fuel cell need time to become economically viable and plug into a revised and as-yet-undeveloped smart power grid. A domestic fossil fuel awakening can buy that time.

from The Great Debate:

Brazil’s attack on Chevron is a dangerous error

A truly bizarre international incident has gone largely unnoticed, even though it is one of the most shameless shakedowns of an American company by another country in recent memory. What is happening now in Brazil could easily scare off U.S. companies that may be looking to do business overseas.

What happened was that a small amount of oil seeped from cracks in the ocean floor near an oil well that was operated by Chevron off Brazil’s coast. This oil seep occurred some 200 miles offshore, was successfully stopped in four days, has been fully contained, and caused no harm to the environment, wildlife or human health. The amount of oil that leaked from the cracks in the ocean floor was less than 0.1 percent the size of the BP spill in the Gulf of Mexico.

Instead of sitting down with Chevron in candid talks to find preventive measures against future incidents, discuss reasonable reparations and additional cleanup, Brazil’s prosecutors went after Chevron like a rabid hound lunging after a hotdog.

After oil bubbled up from the ocean floor, Brazil’s prosecutors issued indictments seeking criminal charges, actual jail time for several company executives and fines large enough to fuel the economies of most Central American nations. Even more egregious is the fact that in 2010 Brazil’s own state-run oil company, Petrobras, spilled almost double the amount Chevron did in this incident and no one from Brazil’s oil company is facing charges or jail time.

When President Obama visited Brazil late last year, he promoted the partnership between America and the South American nation, saying: “We want to work with you. We want to help with technology and support to develop these oil reserves safely, and when you’re ready to start selling, we want to be one of your best customers.”

Brazil is an emerging South American economy. The country will assuredly receive international attention as it readies to host both the Olympics and the World Cup. Even more confusing is the fact that Chevron has been a trusted business partner of Brazil for decades. Why would Brazil’s leaders embarrass themselves by mistreating an established business partner and jeopardize their nation’s own economic prosperity?

Perhaps an overzealous prosecutor sees potential political fame or greedy government bureaucrats see an opportunity to cash in against a multibillion-dollar energy company. Whatever the reason, it’s clear that Brazilian officials have made a large and embarrassing miscalculation. What could have been a resolvable, relatively minor environmental incident has progressed into unfavorable media attention and criticism that could chill investment from companies seeking to do business overseas.

from Global Investing:

BRICS: future aid superpowers?

Britain's aid programme for India hit the headlines this year, when New Delhi, much to the fury of the Daily Mail, described Britain's £200 million annual aid to it as peanuts. Whether it makes sense to send money to a fast-growing emerging power that spends billions of dollars on arms is up for debate but few know that India has been boosting its own aid programme for other poor nations.  A report released today by NGO Global Health Strategies Initiatives (GHSi) finds that India's foreign assistance grew 10.8 percent annually between 2005 and 2010.

The actual sums flowing from India are,  to use its own phrase, peanuts. The country provided $680 million in 2010. Compare that to the $3.2 billion annual contribution even from crisis-hit Italy. The difference is that Indian donations have risen from $443 million in 2005, while Italy's have fallen 10 percent in this period, GHSi found. Indian aid has grown in fact at a rate 10 times that of the United States. Add to that Indian pharma companies' contribution -- the source of 60- 80 percent of the vaccines procured by United Nations agencies.

Other members of the BRICS group of developing countries are also stepping up overseas assistance, with a special focus on healthcare, the report said. BRICS leaders meet this week to ink a deal on setting up a BRICS development bank.

Here are the numbers for the other BRICS (according to GHSi report entitled "How the BRICS are reshaping global health and development")

*Brazil is estimated to have provided upto $1.2 billion, mostly to Latin America and Portuguese-speaking African nations such as  Mozambique. That's an annual increase of 20 percent since 2005

*Russia's foreign aid amounted to $472 million in 2010, mostly to other ex-Soviet states and Africa, four times 2006 levels.

*South Africa brings up the rear with $143 million, up 8 percent a year since 2005. (Click the following graphic to enlarge)