The higher credit rating is making life more difficult for Brazillians and our credit worthiness is a significant advantage although it doesn’t extinguish our debt, it increases it. What it extinguishes is our budget deficits by borrowing money to pay for them. Its much easier for us to run a deficit than for Brazil as our credit is of much higher quality.
Lula is taking surprising action. I hope his plans work and he can get through the tough times ahead. It will be interesting to follow.
Brazil is having a problem with corruption, or to say it in a different way, the markets don’t have confidence that Brazil will do the things needed such as reducing corruption.
The herd at the moment is calm as they are waiting for the next shoe to drop or not as the case may be. But that’s the thing about herds, sometimes they graze and sometimes they stampede. :-))
If Brazil prints more money, inflation will be the result (as well as currency devaluation, etc.) The same question could be asked of the US. Why don’t we just print up a few trillion dollars and pay off the national debt so we don’t have to make those pesky interest payments? The repercussions are beyond imagination.
Dr. Douglas Rice 