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October 10, 2010

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This tendency of spending now is also somewhat based on the fact that the mandatory savings are there for them when they need in the future.
Contrary to the US, in Brazil you won't depend on private savings as the FGTS and other taxes and retirement funds that you can't opt out do exist. You don't need to save money in Brazil to pay for health, as it's free and a private/better healthcare coverage is reasonably cheap compared to other countries especially the US. The only thing you need is to be working, then you can expect a more or less comfortable retirement. Private pension funds are just to complement that income; and if you don't spend the FGTS to buy a house or having AIDS, then you have a huge sum in the bank when you retire.
So, the mentality is: if you'll be provided in the future, then spend what you are able now.

James Miller

Eventually the Brazil bubble will burst and people will stop talking about Brazil as an economic miracle. When they start closing up the favelas then I'll take Brazil seriously. Brazil is a developing country and it will always be a developing country.

Rio Gringa

@Rafael I see what you're saying about retirement and pensions, but if you think of the average middle class family and their monthly expenses, it is quite a lot: car payments, car insurance, health insurance (even if it's not ridiculously expensive like it is in the US), private school tuition or college tuition, food, sometimes rent, cell phone bills, sometimes phone bills, internet, cable and utilities. It adds up before you even get to purchases on consumer goods or luxury items/services, especially in expensive cities like Sao Paulo and Rio.

Corin in Exile

You've been on a roll lately, m'dear. Keep it up. I'm so glad about how intelligently, lovingly, and thoughtfully you write about Brazil... unlike some folks (some even in your own comments section... ahem).

Kris

Mr. Miller is quite the pessimist. The Brazil economic juggernaut may very well fall back to earth, as such "corrections" occur in all developed countries. AS far as measuring progress by "closing up" the favelas - have you been to Detroit lately?

ana australiana

A small legacy from this traveller - I only recently stopped freaking out about not having enough troca every time I had to make a purchase after being in Brazil.

Michel

"Closing up" the favelas?

Actually this would seem a great proposal to many middle and upper class Brazilians!

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