A great cartoon on precisely this nonsense by Nick Thorkelson is in the next Dollars and Sense... not that it would ever get to Berkeley econ dept.
----- Original Message -----
From: "Ulhas Joglekar" <uvj at vsnl.com>
To: "lbo-talk" <lbo-talk at lists.panix.com>
Sent: Wednesday, February 26, 2003 2:13 AM
Subject: Lula in the shadow of Chávez
> The Economic Times
> Unlike in Venezuela, there is a viable scenario in which both visions -
> macroeconomic orthodoxy and greater social justice - can be realised.
>
> Suppose Brazilian interest rates stabilise at a high but not astronomical
> 10%, the economy grows at 4% per year, and the government achieves a
> "primary surplus" - a surplus of taxes over programme spending -
equivalent
> to 4% of GDP. These are all feasible targets; if they are met, then
Brazil's
> government debt will be a stable 60% of GDP.
>
> Once investors see that Brazil's fiscal policy is sustainable, and they
see
> continued low interest rates in the industrial core, Brazil will look more
> attractive. Foreign direct investment will flow in, bringing more access
to
> world-class technology and further boosting economic growth.
>
> Soon, Brazil's government would find itself able to roll over its
short-term
> debt on more favourable terms, as interest rates drop below 10%. Reduced
> debt-service costs would mean that the debt/GDP ratio would start to fall,
> and government spending on infrastructure, education, healthcare, and
> redistribution could rise. Reduced government debt would also mean more
> money available for private investment, providing a further boost to
labour
> productivity.