“Eating baloney and burping caviar”

June 18, 2013

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Brazil is dealing with its biggest protests in 20 years — while in the midst of hosting the Confederations Cup and spending approximately $28 billion to prepare for next year’s World Cup and the 2016 summer Olympics.

The protests started last month over a 7% hike — about 10 US cents — in bus fare prices. But they have now turned into an outcry over stagnating economy, political corruption, and public spending priorities. Though Brazil’s biggest paper seems confused by the whole thing, #ChangeBrazil has a pretty simple video explainer of the protests here.

In 2010, Brazil’s economy was growing at a blistering 7.5% and was the envy of the world. This year, Brazilian economists expect economic growth of under 3%, and first quarter growth came in at just 0.6%. Unemployment, at 5.8%, however, is near a record low, and the country’s ambitious stipend program has pulled some 36 million out of extreme poverty since it began in 2003.

The more immediate problem, Bloomberg writes, is inflation:

After a decade that saw 40 million people rise from poverty, Brazil’s middle class finds itself squeezed by faster inflation, rising debt and a weaker currency. Consumers are spending less at supermarkets and hairdressers as the classic weekend event, a prime cut barbecue, becomes a stretch for some.

Food prices in particular rose at double the rate of inflation last year, Bloomberg adds. No surprise, then, that tomato prices have landed on the cover of national magazines. That transportation increase, Roberto Ferdman writes, means Brazilians making minimum wage could end up spending as much as 26% of their income on bus fare.

The glitz of Brazil’s sports spending hasn’t fixed the country’s more pressing needs. Travis Waldron flags some details: Government watchdogs say that more than 80% of Brasilia’s schools aren’t up to basic standards; in Cuiaba, 70% of the city’s wastewater is left untreated.
One prominent Brazilian sports writer borrowed a local phrase to describe the disconnect between Brazil’s image and its reality: “We’ve been eating baloney and burping caviar.” — Ryan McCarthy

On to today’s links:

Ouch
A man who supplies service workers to the rich is suing Soros, Schwarzman, Icahn and Seinfield – Andrew Ross Sorkin

Reminders
7 examples of how free markets can fail – Mark Thoma

Innovation
“Grass-fed beef is getting to a point where it’s almost an interesting business” – NYT

Tax Arcana
Citi is begging to be taxed heavily – Dan Wilchins
How the IRS keeps the $4.3 trillion nonprofit world secret – Wonkblog

LIEBOR
Ex-UBS trader Tom Hayes charged with criminal conspiracy in Libor case by the UK’s Serious Fraud Office – Bloomberg

Rants
“You lie!”, pie chart edition – BI

Wonks
An economist’s defense of the 1% – Greg Mankiw

Interesting
The case for convenient disabled parking, and against free disabled parking – Emily Badger

The Fed
The US recovery by the numbers: not quite there yet – Ben Walsh
It’s not just the Fed, you know – Econobrowser

Mild Rebukes
“A city with only one narrow class of people isn’t a city… it’s a suburb” – Emily Badger

UGH
Motif’s newest way to disrupt you from your money: investment advice from brands – Jason Del Rey

Yikes
The Federal Housing Finance Agency hired an active insurance lobbyist as an outside expert – Jeff Horwitz

And, of course, there are many more links at Counterparties.

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