The Morning Brief: Guido Stripped to Speedo By Credit Remarks

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Notable subscription package on offer: 12 months of the Valor Econômico daily + 6 months of the CartaCapital weekly for just R$47 (US$27, or some 10% of a minium salary) a month in parcel payments! I find that offer attractive: I already read both of them religiously. The offer seems to imply that someone thinks there are a lot more people out there like me. In other news, the Gazeta Mercantil signs a content partnership deal with the New York Times. As if the New York Times had anything useful knowledge about the price of sausages, chopp and black-market botijões in Itaim Bibi.

If a rumor comes into your possession, better pass it along to the next guy, and quick: It could be lie. –Millôr Fernandes

The Jornal do Commercio (Rio de Janeiro, Brazil) reports: The federal treasury minister insists that he never said what the press here spent the last few days screaming loudly that he said, or at least implied!

Rumor was that the government was contemplating limiting automobile financing to a period of 36 months.

Guido “Guns and Butter” Mantega says it just ain’t so.

We have heard such sharp exchanges between government and the press before, many times.

The most striking example, perhaps, was the rumor that President Squid would seek a third term, like Uribe and Uncle Hugo. There were and are no credible indications that this was anything but a gibbering fairy tale.

But Veja magazine’s designated blogger, for example, shrieked loudly and hysterically against this sinister but nonexistent factoid-phantasm, summoning patriotic Brazilians to take up arms and join the “counter-coup.”

This was the top story on New World Lusophone Bloomberg today as well, which ran the minister’s remarks in their entirety.

I think the arrival of Bloomberg-style business journalism here is likely to raise the level of the game quite a bit.

Help make the jogo a little more bonito.

O governo quer evitar que o crédito e o consumo cresçam de forma insustentável ao longo dos próximos anos, mas não cogita restringir os prazos dos financiamentos, afirmou o ministro da Fazenda, Guido Mantega. Para garantir que o ritmo atual de crescimento da economia não tenha que ser “abortado”, Mantega disse que serão concedidos estímulos para investimentos a setores-chave, como o automobilístico, aço e cimento. O objetivo é evitar descasamento entre oferta e demanda, que contribua para aceleração da taxa de inflação.

The government wants to avoid having consumer credit grow in an unsustainable manner in the next few years, but is not contemplating restricting the terms of financing contracts, said treasury minister Guido Mantega. To guarantee that the current rate of economic growth is not “aborted,” Mantega said incentives will be conceded to key sectors, such as automobiles, steel and cement. The objective is to avoid a disconnect between supply and demand, which tends to contribute to inflation.

O ministro pretende também reunir-se com representantes dos bancos para obter garantias de que o nível de alavancagem das instituições é seguro. Os financiamentos alongados de veículos preocupam especialmente o governo. Especialistas já alertaram sobre o perigo de bolha nesse tipo de crédito.

The minister also intends to me with representatives of the banking sector to obtain guarantees that the degree of leverage being used is at safe levels. Extended auto financing are of special concern to the government. Experts have already warned of a bubble in this type of credit.

O monitoramento do risco de crédito em decorrência da alavancagem já está sendo feito pelo Banco Central, instituição por instituição. Conforme informou o Jornal do Commercio na edição da última quinta-feira, o BC elevou para 93 o número de instituições financeiras que serão visitadas pelo setor de fiscalização da autoridade monetária, com vistas a evitar um subprime brasileiro. As instituições que se apresentarem carregadas de operações de crédito com algum sinal de risco serão instadas a conter a expansão da carteira.

Monitoring credit risk for excessive leverage is something the Central Bank is already doing, institution by institution. As the JC reported last Thursday, the CB now oversees 93 financial institutions, looking to avoid a homegrown subprime situation.

Anyone remember the Basil Accords? Capital adequacy? “Fair value” asset valuation? Supposed to avoid the happening of what is, in fact, happening? Enron: never again?

[tktktk]

“Então não deve haver preocupação ou qualquer atitude do consumidor, que vai continuar tendo oportunidade de comprar bens de consumo duráveis, televisores, geladeiras, automóveis, todos os bens que estão sendo consumidos pelos brasileiros”, garantiu o ministro.

[tktktk]

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