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March 01, 2010

Comments

Corinne

you are forgetting that credit is also extremely expensive. Credit card rates average 10 to 12% A MONTH and overdraft credit for checking accounts is around 8 or 9% A MONTH. So not paying off loans or credit cards every month spirals you into unserviceable levels of debt very fast. The current credit market in Brazil must be placed into the context that for so many years, the currency was not stable enough for credit and so many consumer goods were completely out of reach for anyone who could not pay cash. The trend has been for expansion of the credit market and lowering of interest rates, which could be a double-edged sword (easier to pay off debt, but also easier to get into debt in the first place).

Account Deleted

Just a small correction: it was the São Paulo state government ("Estado de São Paulo" the state, not the newspaper) who released the salariometro (incometer ;)) website.

RioGringa

Thanks, Corinne - this is an extremely important factor as well.

Luis, Estadao (the newspaper) was promoting the salariometro on its website - that's how I found it.

Marcio Bernardo

Oi "Gringa", parabens pelo blog que eh sempre interessante e atual (eu li sobre o caso Sean Goldman aqui). Nem sempre eu concordo com as suas colocacoes mas acredito que vc nao tem preconceito ou agenda em relacao a sua visao do Brasil.

Comparacao de renda/nivel de vida entre paises eh extremamente complexo... teoricamente vc deveria que "normalizar" usando ppp (http://en.wikipedia.org/wiki/Purchasing_power_parity), uma renda mensal de 2,425 eh considerado Classe media baixa no Brasil e 60K por ano eh Lower Middle-Class nos EUA (http://en.wikipedia.org/wiki/American_middle_class)a grande diferenca eh o acesso a procutos electro/eletronico como vc mesmo disse... mas socio-economico e politicamente eh basicamente a mesma classe economica

embecker

Gostei bastante do seu post hoje. Bem legal, e bom uso do salariômetro. O que continua me impressionando é como o salário de vários empregos no Brasil é tão baixo comparado aos EUA, mas a cidade de São Paulo é a 3a cidade do mundo em termos de custo de vida. Dificil mesmo.

Jessica

great article :-) import taxes are, as you say, just out of this world. i sent a relative in brazil some eye-glasses recently and the import tax that she had to pay was something like 125%. just nuts. it's obviously a huge stream of revenue .. but also starts to look something like protectionism .. and if what i saw on my recent visit is true, it seems to make imported goods even more desirable than locally-manufactured equivalents, because the price adds such a huge amount of prestige ..

Marcio Bernardo

Mercer Consulting has a respected and widely used rank of most expensive city in the world

(http://www.mercer.com/costoflivingpr#Top_50)

Sao Paulo is the 72nd most expensive city, 3rd in Latin America (but it seems there is a huge gap between 1st LatAm (Caracas) and 2nd (Sao Paulo))


Jessica, unfortunatelly protectionism is alive and well in many countries not only Brazil (check the tax Brazilian products such as OJ, sugar and ethanol has to pay to enter US market)

Paulo

Hello Gringa,
I liked your comments but I thought a bit over prejudice, for example: "being able to buy washing machines for the first time". That's not true at all. All classes of Brazilian, even the lower class are able to have a washing machines. How the would wash their clothes if they work all day? We know that inequality is a bigger problem in Brazil, yet.
Thank your for your post.
Paulo

bambooska

I really doubt it will change. And because of loans and credit cards, our nation is consisted of 52% middle class. Which, in theory, is a good thing.

Tritone

There has to be some way to make money off of this ipod/electronics situation.

An American could fill up a suitcase full of ipods, Psps etc, go on 'vacation' in brazil, sell them at a discount to brazilians, and make a ton of money.

Are there any laws againts that?

Rio Gringa

hey guys!

paulo, unfortunately, there are Brazilians who don't own washing machines. Not only is this an example I got directly from articles about the growing Brazilian middle class, but I can also personally vouch for the fact that my husband's aunt, who runs a household of 5, just got a washer for the first time last year (she cried). I have no idea how she did it beforehand.

Tritone, you are only allowed to bring up to US$500 worth of goods into Brazil. If you go through customs and they see you have 50 ipods, it's not good. But under $500 worth of new stuff is allowed.

Tritone

Paulo disse:
-------------------------------------------------
How the would wash their clothes if they work all day?
--------------------------------------------------

Funny. Do Brazilians even wash their own clothes, or do they have their domestic servant do it for them?

Ryan Vaquero

The issue of the growing middle class in Brazil immediately going into debt is important and it's something that I've discussed with a lot of Brazilians I know.

One BIG difference, though, between the U.S. and Brazil on personal credit card debt is the way in which the debt is handled by the credit card companies -- perhaps owing to the regulatory laws that exist (or, in the US's case, don't exist) in each country.

For instance, I know MANY Brazilians who intentionally get credit cards and burn through their credit limit. Many people from the US do this, too, but to my surprise, the credit card company in Brazil then negotiates with the debtor and keeps DECREASING the amount owed in order to get whatever they can out of the debtor.

In the US, of course, the interest keeps piling on and on until many families are ruined by the debt they've incurred. In Brazil, payment plans are much more common (even on Brazil's equivalent of Orbitz ... sites where you can buy plane tickets ... there's always the offer to pay the price of the ticket in an installment plan). And, credit card companies always seem willing to forgive a certain percentage of the outstanding debt over and over again, until the person is able to pay off the decreased amount.

When I found out about this, I was shocked! I have yet to figure out how this can be although my hunch is that it's related to regulations. Gringa, if you have any insight into how this happens, I'd certainly be interested to hear what you think.

I also want to add one piece of analysis that's missing here but is important to just about any topic related to Brazil. For the past 10 years, Brazil's government has been guided by the socialist PT (Worker's Party), which co-founded the Foro de São Paulo with the Cuban Communist Party and they are openly committed to "21st-Century Socialism" in Brazil and all of Latin America (even if this is down-played in day-to-day news coverage, Lula has fulfilled every commitment required of his government per the Foro de São Paulo agreements).

This is important to bring up because it means that the directions that US society and Brazilian society are headed couldn't be more different and it shouldn't be assumed that what happened with the US's indebted middle class will probably be very different than what happens to the Brazilian middle class debt. Whether we are looking at Dilma & then Lula again, or a 2-term Dilma presidency, Brazil will continue down the path towards socialist-guided decisions in key policies.

Marina

Many brazilian have domestic servant, whoever, if they can afford to pay a domestic servant, they also will certanlly have a wash machine.
It´s also known that in Brazil is very common having a domestic servant more that any other Country I´ve known. They aren´t paid well. They make about 530,00 real a month.

RogerPenna

Marcio Bernardo, PPP includes only a small list of products and services. Obviously, most products which are more expensive in Brazil than anywhere else in the world are left out of PPP calculation by our government, so they can keep to lie to use how life is good here and how things are not that expensive here nor our salaries are that low. Dont buy Lula´s lies!


@Paulo: come on man, dont talk nonsense. A minority of brazilians have washing machines. Most brazilians (class C, D and E) will wash their clothes at the TANQUE!

Its not for nothing that brazilians have the term "barriga de tanquinho" (tank belly) to describe a man´s belly full of muscles... most foreigners may not even understand because I guess most of them never saw a clothe washing tank before!

Jake

Gringa:
1. Talking about credit: total real estate financing / GDP is in Brasil a mere 2%; in the US 69% and Europe +100% in many countries.
http://www.emergingsouth.net/renting-versus-buying/
2. External debt / exports in Brasil is a mere 6,8%. The US external debt / exports are a staggering 67,61%.
http://www.morssglobalfinance.com/debt-get-out-of-europe-japan-and-the-us/


Brazil's credit market can grow exponential before it reaches the size of the US or European credit markets. Brazil is complete underleveraged today.

Vera

Hi Rachel,

Publiquei no meu blog um post sobre a diferença do poder de compra entre brasileiros e australianos (http://braziliantalk.blogspot.com/2009/11/poder-de-compra-de-brasileiros-e.html). O post é baseado na pesquisa Prices and Earnings, da UBS, que faz essa pesquisa desde 1971. Ela compara o poder de compra das pessoas em 73 cidades pelo mundo, e inclui o Rio de Janeiro, São Paulo, Sydney, Nova York etc.

O que eu acho legal dessa pesquisa é que ela compara alhos com alhos, e não com bugalhos. Acho que vc vai se interessar pois tem muito a ver com o que vc escreveu.

Abraços
Vera

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