Ibero-American News Digest
As the Euro Goes, So Goes the BRIC. And Brazil?
May 23 (EIRNS)Brazilian officials scrambling to shore up the nation's banking system by making bankrupt bigger banks "eat" the debt of bankrupt little banks, are wasting their time. With the arrest of IMF chief Dominique Strauss-Kahn, the plug has just been pulled on the endless bailout of the Inter-Alpha Group.
That means not only that the euro is finished, but so is London's international carry trade upon which Brazil's entire financial system has been based for more than a decade, the so-called "BRIC" system. Any Brazilian official not already quietly preparing capital controls, and the legislation required for a Glass-Steagall-modeled reorganization of the banking system, may soon find himself facing mobs holding them responsible for the chaos and mass death which will shortly ensue inside Brazil.
London ghouls are already putting out the word that Brazil's apparent "financial success" is a dangerous bubble. Wipe out the speculative gains which have driven up the world market price of Brazil's commodity exports, for example, and Brazil's US$5.03 billion trade surplus of the first four months of 2011 turns into its mirror image, but negative. The value of the real having been driven up by the flood of dollars entering the country for the carry trade, Brazilian high-tech and machinery exports have plummeted, and the country is being flooded by imports of foreign-made goods, returning Brazil to the colonial days of living off raw material exports. Sao Paulo Federation of Industry's International Affairs Director Roberto Giannetti da Fonseca told Dow Jones on May 18 that if international commodity prices were merely equal to last year's (already speculative) prices, Brazil would have posted a US$5 billion trade deficit.
Brazil's domestic credit bubble, perched upon a "payroll loan" scheme no sounder than the trans-Atlantic subprime mortgage bubble which blew in 2007, is likewise popping. At the end of April, the Brazilian Central Bank arranged for Brazil's 23rd-largest bank, the Banco BMG, to buy up two small Brazilian banks bankrupted in the payroll scheme, Banco Schahin and Banco Morada.
There will be more such moves, Central Bank director Anthero Meirelles made clear on May 23. Meirelles told Valor Economico that Brazil's small and medium banks will have to merge with rivals to strengthen their capital base; the situation is "more competitive" and the small guys can no longer depend on selling their loan portfolios to larger rivals. The Central Bank is analyzing requests from at least 20 local and foreign lenders to operate in Brazil, he reported.
Haiti Defenseless Against Hurricanes
May 22 (EIRNS)Bill Read, head of the U.S. National Hurricane Center, told an audience in Fort Lauderdale, Fla. May 20 that he is deeply concerned that Haiti will not be able to withstand the Atlantic hurricane season that begins June 1.
"I don't feel comfortable that, should there be a direct hit, there would be the capacity to shelter everybody in a safe place," Reed told the Florida Governors' Hurricane Conference.
That is an understatement. Thanks to the Nero in the White House, Haiti has no protection from any natural disaster, with 700,000 people still living in flimsy and filthy tents in Port-au-Prince, and countless tens of thousands more living in precarious "housing" not fit for human habitation. Also, with the advent of the rainy season, the number of cholera cases has spiked upward in several departments. Since its outbreak last October in the Artibonite Delta basin, cholera has killed 5,032 people and infected more than 300,000.
Forecasters at the National Oceanic and Atmospheric Administration (NOAA) warned on May 19 that as many as 18 tropical storms will develop between June 1 and Nov. 30, and three to six of those could strengthen into major hurricanes, with top winds of 111 mph or higher.
Haiti has no defenses against such storms. It is extremely vulnerable to flooding, even from a weak tropical storm, due to the extreme deforestation that has occurred over many decades, as well as to cutting of trees for charcoal that is used for fuel. There are no trees or vegetation to absorb water, and infrastructure that might protect the population from flooding is nonexistent.
The mayor of the Port-au-Prince suburb of Carrefour, who attended the Governors' conference, reported he can do nothing for the people of his city in the event of a hurricane or other natural disaster. Carrefour has no emergency shelters, very few medical resources, and lacks sanitation infrastructure. He reported that all he can do is urge people to leave and find a safer spot, and not to expect any help from the authorities. But many refuse to leave, he added, responding "We don't have anywhere to go; we'll stay right here, and if we have to die, we'll die here."
Unending Rainfall Devastates Colombia
May 22 (EIRNS)Colombian officials declared a state of high alert in the capital of Bogotá in anticipation of intense rainfall over the May 21-22 weekend, predicting rising levels of the Bogotá River and worsening of an already dangerous flooding of the nearby Sabana region.
A week earlier, officials declared a red alert for 10 municipalities in the department of Cundinamarca, where Bogotá is located, due to the incessant rains which have caused the river to overflow its banks and flood surrounding areas. It's estimated that 95% of Cundinamarca has been affected by flooding, and the unstoppable rains make any rebuilding and recovery work almost impossible.
In mid-May, the water from the Bogotá River broke through a retaining wall that protected the University of La Sabana, flooding it with a million cubic meters of water.
The unprecedented rainfall in Colombia over the past year, part of a planetwide pattern of extreme weather and seismic and volcanic activity, has killed 452 people to date. Flooding and mudslides have destroyed housing, farmland, crops, and animals in various parts of the country. The Agriculture Ministry reports that 280,000 head of cattle have drowned, which could lead to an increase in the meat price. At least 52,000 working farms have been ruined, leaving crops under water; 3 million people have been displaced from their homes.
Food shortages are beginning to appear because many roads used to transport food are flooded, making it impossible to supply regions of the country's interior. There are already reported shortages of grains, beans, cacao, fruit, and dairy products in some regions, and destruction of agriculture is also leaving many peasants and farmers unemployed.